Consumer Law

Medical Malpractice Reform May Cost More Than It Saves

By Justinian Lane

Now that the Democrats don?t have a filibuster-proof majority, medical malpractice reform is back on the table.  Many argue that if we enact some sort of malpractice reform, we?ll save money because doctors will be less likely to practice defensive medicine.  Defensive medicine means different things to different people, but in essence, it occurs when a doctor runs a test or performs a medical procedure out of fear of a malpractice lawsuit.  The most-often used example is that of a doctor who orders an MRI to rule out some rare injury.  The doctor doesn?t order the test because he or she really believes the patient has the injury, but instead because if the patient does have the injury and the test wasn?t run, the doctor could be sued for medical malpractice.  The argument goes something like this: If the doctor isn?t afraid of being sued, he or she won?t run that test.  The taxpayers (through Medicare/Medicaid) won?t pay for that test, so we all save money by enacting malpractice reform.

But there?s a serious flaw in that argument, and it?s called subrogation.  Assume that a doctor makes a medical error during a surgery, and that error necessitates a second surgery.  If the patient files a medical malpractice lawsuit and recovers any money, the insurer who paid for that second surgery will get reimbursed for its expenses.  That right of the insurer to be reimbursed is referred to as the right of subrogation.  If the patient doesn?t file a malpractice lawsuit, the insurer ends up footing the bill for the second surgery.  And if the insurer is Medicare or Medicaid, ?the insurer? is actually the taxpayers.

The problem with the current debate over how much money malpractice reform may save is that it doesn?t take into account how much money the government recovers every year through malpractice lawsuits.  Considering that the cost of a second (or third) surgery is generally far more expensive than running an unnecessary test, it?s entirely possible that we?ll lose more money than we save.  If we?re going to justify medical malpractice reform on the ground that it will save us money, we cannot seriously evaluate that justification until we know exactly how much money we?re taking in through subrogation, and until we figure out how much of that money we?ll lose through enacting malpractice reform.

Is it too much to ask that if we?re going to make decisions based on numbers, we base the decision on all of the numbers?

Full post as published by TortDeform.com on February 12, 2010 (boomark / email).